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Dren Hima
Dren Hima is Head of Research at Coincub, leading research across digital asset regulation, licensing, market structure, tokenization and institutional adoption.
US Judge Lets Stock Perpetual Futures Trade, Doubts Regulator’s Power
A federal judge refused to halt stock perpetual futures on Kalshi, Coinbase Derivatives and Bitnomial, but said the CFTC likely lacked authority to allow them. The approvals remain while the injunction motion proceeds.
U.S. District Judge Valerie Caproni denied a temporary restraining order on November 3 that would have halted stock perpetual futures on Kalshi, Coinbase Derivatives and Bitnomial, while finding the Commodity Futures Trading Commission (CFTC) likely overstepped its authority.
- Judge Caproni denied the emergency request because the harm claimed was not shown to be “actual and imminent.”
- The CFTC deemed the contracts approved under Commission Regulation 40.3 after exchanges filed them on September 18.
- The CFTC’s opposition to a preliminary injunction is due November 6, and the plaintiff’s reply is due November 10.
Perpetual futures are contracts with no expiration date. Traders on each side exchange periodic funding payments that keep the contract price tied to the price of the underlying stock.
What the court decided in the CFTC case
The Capital Markets Alliance Association, a New York nonprofit, sued the CFTC, the US derivatives regulator, and Chairman Michael S. Selig in the Southern District of New York, case No. 1:26-cv-09608. It seeks to undo the approvals of filings by all three exchanges. According to a declaration from its secretary, Adam Ford, its members include Cboe Global Markets, Citadel Securities and the Healthy Markets Association.
Caproni held a teleconference with the parties, hours after the CFTC said the products could begin trading on U.S.-regulated exchanges. She wrote that the group “is likely to succeed on the merits” of its claim that the agency lacks statutory authority to allow perpetual derivatives on individual stocks for retail investors on CFTC-regulated platforms.
She reasoned that perpetual contracts do not provide for a sale for future delivery of a single security, so they cannot be a security future. Instead, she said, they appear to satisfy the definition of a swap, which falls to the Securities and Exchange Commission (SEC). She also found that the balance of equities and the public interest favor the alliance, writing that the agency’s actions seem to represent a major disruption to the equities market.
The request failed on one point. Caproni said declarations from Cboe, Citadel Securities and Healthy Markets were “conjectural” about member harm and did not show irreparable harm.
Approvals stay in place and the dispute over the label
The order leaves the approvals in place. It does not decide the case or the alliance’s separate motion for a preliminary injunction. The schedule is subject to change by the assigned judge, and the docket lists Judge Lorna G. Schofield. Kalshi was listing four single-stock perpetuals on Qualcomm, McDonald’s, Amgen and Costco by November 4, with maximum leverage of 4.9 times.
Selig’s November 3 statement said the contracts were deemed approved under Commission Regulation 40.3 as security futures products, a category the CFTC and SEC oversee jointly. The exchanges filed them on September 18, and the agency let its 45-day review period lapse without a written order.
The alliance argues that a contract with no expiration date and no delivery obligation is a security-based swap. Congress limited retail trading in those to national securities exchanges under full SEC oversight. Its complaint says the CFTC “invited a parallel, synthetic market in U.S. stocks to grow outside the exclusive jurisdiction” of the SEC.
A CFTC spokesperson called the lawsuit “troubling” and told Reuters: “Our markets should be governed by law, not litigation campaigns intended to block innovation.”
Wider stakes for crypto derivatives venues
Perpetuals are the core product of crypto derivatives trading, and Kalshi and Coinbase have used the CFTC’s framework to bring them onshore. The agency approved the first U.S.-listed bitcoin perpetual on May 29, and Kalshi went live with it soon after.
CME Group sued the CFTC in June, arguing that a contract built on exchanged funding payments is a swap, not a future. That case is pending in Washington. The New York order covers security futures, not commodities like bitcoin.
